We've found that the many banks are pretty liberal when accepting checks for a school or non-profit account. Frankly, people write all kinds of things even when it's clearly stated that the checks should be made out to XYZ. On the one hand, you'd like to think if you put a name on your check, no one else could deposit it. On the other hand, it would be a nightmare if the bank enforced it in these cases.

For instance, I know our cafeteria is outsourced to a 3rd party, a name nothing like our school's. However, I can never seem to remember their name as we're scrambling to get ready for school and one my kids announces, "Oh yeah, they said I'm out of money on my account." I just make the check out to the school - even though I know it's wrong. (Better than leaving it blank.) The company that runs the cafeteria never has a problem depositing it.

One of my officers just showed me a batch of 10 checks that parents had made out to buy T-Shirts for some activity we had. They were supposed to make the checks out to "President's" something or other. But now that company has decided they only want ONE check from us, not the ten from the parents. I doubt we'll have any problem depositing them in the PTO account.

Thanks JHB and Tim. I appreciate the advice. It makes more sense to me know. I have been working on getting the tax-exept and 501(c)3 paperwork going etc so if we need it it will be done. Everytime I come on this site I realize how little I know and how much I have to learn!!!!
I have one more question about all of this - They have been doing fundraisers (they just did a hop-a-thon) and the parents are sending in checks made out to the school's PTO. However, if the PTO is not in place (they are part of a different school's pto this year but the checks were made out to the new PTO being formed for next year) so how could she deposit the checks into her school account which would be under another name? Again - I am completely lost with these things so if I's obvious to others I apologize for being slow. Thanks again.

[ 05-10-2002: Message edited by: ChrisB ]</p>

What if you basically take the approach that you are setting up your PTO to be a standard non-profit and eventually at 501(c)(3)? If you are doing that, then your intent from the start would be to follow appropriate best practices which would include control and accountability of the funds.

One of my rather rambling points was intended to be that the principal may feel that the school owns some of these fundraisers and that PTO merely supplied the volunteers to run them. Thus it is HER right to spend the funds as she sees fit. In that case, you need to clarify which proceeds go to the PTO and which to the school.

A school can only handle so many fundraisers per year, and it's not automatic that they belong to the PTO. So there may need to be some compromising.

Meanwhile, I'd discreetly move forward with setting up the EIN and the bank accounts. You want the infrastructure in place so that the negotation isn't that "it's too much trouble to set that all up", but merely a decision (in advance) about who gets which proceeds and where they are deposited.

Hi Chris -

JHB's analysis of the landscape is -- as usual -- right on the money. There are schools all across the spectrum on how PTO $$ are handled.

However, the situation you've described is at the far end of the spectrum, and it's certainly not a set-up we'd recommend here at PTO Today.

It's not surprising for a principal to desire controls on funds both for obvious self-serving reasons (principal gets what principal wants) and for accounting reasons (principal can track funds with school systems). However, there are better/compromise ways to achieve same/similar goals that work much better for the long-term.

Problem is that in your set-up, several problems will creep up:

1. Discourages parental involvement. If parents feel like they have no say in the school, parents will move away from the school. Research proves this is very bad for a school.

2. Make fundraising less effective. If parents have no say in how fundraising $$ are spent, they will support fundraisers less enthusiastically. At the very least, the principal will find that those all-important 4-7 folks who do a ton of work on fundraising will be less available. That will really hurt fundraising -- and the principal will wind up getting less "stuff" in the long run.

3. Finally, even the accounting control issue is not optimized in this solution. It's never best to have one person controlling funds with impunity. If accounting control is the goal, then more eyeballs/checks are always best. That goes for PTOs who want complete control, too.

You need to work with this principal to be successful. Is there a way you can make these points hit home without creating a large fight? That would be my first option.

Tim

[ 05-09-2002: Message edited by: Rockne ]</p>

Thanks JHB. My concern is not that she wants the money put into her school account - it's more the fact that she spent the money without anyone knowing it. After the money was deposited she went out and bought stuff for the school (which of course it was intended for in the first place). The people on the board this year didn't know anything about it until the money was all gone ("every last dime"). They had been doing fundraisers to have money for activities at the end of the school year. Now there isn't any. So, yes the money was spent on the school but it wasn't used for what they thought they were raising money for. Maybe I'm completely nieve (sp) on how this works. I'm just concerned that things aren't exactly above board. Thanks for listening!! :

[ 05-09-2002: Message edited by: ChrisB ]</p>

Technically, a PTO is a separate legal entity. However, in reality, we are a support organization that must operate not only according to appropriate state/federal laws (for non-profits) but also within the policies and rules set by the district, the principal, and the schools. Many of the latter are not well documented, may be arbitrary, and are often inconsistent. It's not like being in business where you can just choose not to do business with a group if you don't like the way they operate - you pretty much have to find a way to make it work. And this includes choosing your battles.

Many schools/districts are looking at increasing control over fundrasing money in various ways and there are lots of pros and cons as to if this is appropriate and to what degree. It ranges from the concept that the primary purpose of the PTO is strictly to be a volunteer organization to the idea that the PTO is absolutely, positively independent and should control all fundraising within a school. (Obviously, most fall somewhere between the two extremes.) The drivers seem to be 1) tighter budgets for the schools, and 2) problems around the country with mismanagement of PTO/PTA funds. Really, aside from membership dues whether a school or the PTO "owns" a fundraising activity (bookfair, catalog sale, directory, pictures, yearbook, etc.) varies from place to place.

You can't afford to alienate the principal, but you may be able to move forward with setting up the infrastructure of your group without his help. Meanwhile, can you find out what the district policy is about PTOs and how money is controlled? I'd balk at just handing over all the funds, and I'd make a case that such a plan would negatively effect parent involvement and amount of funds raised.

Can you perhaps suggest a compromise? Two years ago our district auditor directed the schools take back all or part of the big fundraisers because of various mismanagement problems in the district. Our compromise was that we retained the Fall sale (the big one) and the school owns the Spring sale. We still organize and provide volunteers for the Spring sale, but the proceeds go directly to the school. (It's also the way Bookfair is run.) Everyone knows this up front, and it works well for us.

Good luck!

[ 05-08-2002: Message edited by: JHB ]</p>